To assess taxpayers’ income without their agreement, the IRS is typically required to go through a lengthy procedure. There is, however, one exception to this requirement, which is the math error exception under Section 6213 of the Internal Revenue Code. Under this code section, the IRS can assess additional tax due to a math or clerical error on the taxpayer’s return. This authority was initially designed to allow the IRS to assess a tax liability by quickly resolving simple mathematical or clerical mistakes. This code section was later expanded to also include:
- An arithmetic error;
- Inconsistent entries on the return;
- Omissions of information necessary to properly substantiate a return item; and
- Deductions or credits that exceed limits.
In the first six months of 2020, the IRS made approximately 600,000 of these math error corrections. So far this year, however, the IRS has already sent over 9 million math error correction notices to taxpayers. Approximately 7.4 million of these involve corrections related to the economic impact payments the IRS made last year, which were based on estimates that were required to be reconciled on the taxpayer’s 2020 tax return.
When the IRS makes a math error adjustment, it will send the taxpayer a Notice CP11 or CP12, informing the taxpayer of the adjustment, correction and balance due or corrected refund amount. Once notified of the tax change, the taxpayer has 60 days to make an oral or written request for an abatement of the additional tax that was assessed. The IRS is required to abate the assessment when the taxpayer requests abatement. After the abatement, the IRS – if it still believes that an assessment is required – must use its correspondence audit procedures to do so.
We’re Here to Help
Bennett Thrasher’s Tax Controversy practice can help you navigate how to best respond to IRS math error notices. To learn more about our services, contact James Pickett, Director of our Tax Controversy practice, by calling 770.396.2200.